Alsreit  Capital, the financing vehicle of Malaysian real estate investment trust ( Reit ) Al-Salām Real Estate Investment Trust ( Alsreit ), accessed the ringgit sukuk market in a groundbreaking transaction on the back of a guarantee extended by Credit Guarantee & Investment Facility ( CGIF ), a trust fund of the Asian Development Bank.

The 455-million-ringgit ( US$109.96 million ) senior sukuk offering, announced on November 24, has a tenor of five years with an interest rate of 3.95%. The guaranteed wakala sukuk, rated AAA by Ram Ratings Services, is the pilot issuance under Alsreit’s 3-billion-ringgit wakala sukuk programme.

Within the programme, CGIF has committed a guarantee limit of up to 500 million ringgit to back the issuances earmarked for refinancing its existing term financing and asset enhancement initiatives, facilitating the extension of Alsreit’s average financing tenor via long-term fixed-rate institutional capital.

The transaction, issued under the Asean+3 multi-currency bond issuance framework, is CGIF’s first guaranteed ringgit sukuk issuance, the largest sukuk CGIF has guaranteed to date in the Association of Southeast Asian ( Asean ) region, and it is the largest transaction to be supported in Malaysia to date – all of which, the trust says, “underscores its commitment to catalyze local currency sukuk issuances in the region”.

The transaction also represented Alsreit’s maiden rated sukuk offering. It attracted a diverse range of local and international investors, achieving a book coverage of 4.95 times.

The guaranteed sukuk likewise injects further diversity in terms of financing options and investment opportunities to the Malaysian ringgit sukuk market, the largest local currency corporate sukuk market in the world.

Maybank Investment Bank acted as the sole principal adviser, sole lead arranger as well as a joint lead manager for the transaction, along with CIMB and RHB Investment Bank.

Hongwei Wang, CGIF’s CEO. describes the first guaranteed sukuk transaction in Malaysia as a reflection of CGIF’s commitment to work alongside regional issuers and investors to broaden both their financing and investment options, as well as deepen market participation.

Zulhilmy bin Kamaruddin, the CEO of Alsreit manager JLG REIT Managers, notes that the strong investor demand and the deal’s competitive pricing demonstrates the market’s confidence in the company’s portfolio and strategic direction.

Michael Oh-Lau, Maybank Investment Banking Group’s CEO, adds that the wakala sukuk programme has been designed as a bespoke and dynamic platform that provides Alsreit Capital with maximum flexibility – enabling the issuance of senior and perpetual sukuk, in rated or unrated formats, including future sustainable variants. “This structure,” he explains, “supports the company’s evolving funding needs in tandem with its long-term growth trajectory.”

Alsreit invests in a diversified portfolio of income-generating Shariah-compliant properties, including retail malls, an office building, food and beverage outlets, industrial buildings and an educational institution. The Reit was listed on Bursa Malaysia in September 2015, initially with 31 properties and a total asset value of 903.1 million ringgit.

To date, Alsreit manages a portfolio of properties strategically located in Johor Bahru and other major towns across Malaysia, with total assets under management of about 1.2 billion ringgit. It aims to deliver stable and sustainable returns to unitholders, the Reit points out, through prudent asset management and selective acquisition of quality, Shariah-compliant properties.

The Reit’s sponsor is Johor Corporation, a state -owned conglomerate and the principal development arm of the Johor state government, with interests across four core sectors, namely agribusiness, wellness and healthcare, food and restaurants, and real estate and infrastructure.